J.F. Lehman and Company, LLC entered into a definitive merger agreement to acquire Heritage-Crystal Clean, Inc from The Heritage Group and others for $1.1 billion.
The merger is not subject to any financing condition. The merger agreement provides for a ?go-shop? provision under which Crystal Clean and its Board of Directors may actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals during a 35-day period following the execution date of the definitive agreement, expiring at 11:59 p.m. Eastern Time on August 23, 2023. Upon termination of the agreement under certain specified circumstances, Crystal Clean will be required to pay JFLCO a termination fee of $42,331,515 (except in the case the Merger Agreement is terminated in connection with a Superior Proposal during the Go-Shop Period, and certain other limited circumstances, in which case such termination fee will be $23,584,701), and JFLCO will be required to pay Crystal Clean a termination fee of $72,568,311.
Crystal Clean?s Board of Directors has unanimously approved the merger agreement and recommends that Crystal Clean shareholders vote in favor of the transaction. The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions, including approval by Crystal Clean shareholders and the expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. Additionally, The Heritage Group and its affiliates, which collectively hold 26.70% of the Crystal Clean common shares, and Brian Recatto, who holds 3.23% of the Crystal Clean common shares, have each entered into a voting and support agreement with JFLCO pursuant to which each has committed to vote all of its Crystal Clean common shares in favor of the transaction. As of August 24, 2023, the go-shop period with respect to the transaction expired.
William Blair & Company is serving as financial advisor to Crystal Clean, Stifel, Nicolaus & Company, Incorporated acted as financial advisor and delivered a fairness opinion to Crystal Clean with respect to the proposed transaction, and Heidi Steele of McDermott Will & Emery LLP is serving as legal counsel and due diligence provider to Crystal Clean. Houlihan Lokey, Inc. is serving as lead financial advisor to JFLCO, and Jefferies LLC is also serving as financial advisor to JFLCO; Alain Dermarkar, Robert Cardone, Kyle Park, Scott Cohen and Jason Pratt of Shearman & Sterling LLP and Jones Day are serving as legal counsel to JFLCO. J.R. Bartrug. Alain Ranger of Fasken Martineau DuMoulin LLP acted as legal advisor to Heritage-Crystal Clean, Inc. Shearman & Sterling LLP acted as due diligence provider to JFLCO. Computershare Trust Company, National Association acted as transfer agent to HCCI. Crystal Clean has engaged Mackenzie Partners, Inc. to assist in the solicitation of proxies for the Crystal Clean special meeting. Crystal Clean estimates that it will pay Mackenzie Partners a fee of $17,500, plus reimbursement of certain expenses.